Which of the following is most likely to cause the aggregate supply curve to shift to the right?
A. A one-time tax rebate.
B. A decrease in marginal tax rates.
C. A decrease in international trade.
D. An increase in the money supply.
Answer: B
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
The decrease in social surplus from a market distortion is referred to as:
A) deadweight loss. B) market loss. C) revenue loss. D) Pareto loss.
Aggregate supply in the new classical aggregate supply
a. is vertical in the short-run. b. is horizontal in the short-run. c. is upward sloping in the short-run. d. None of the above
Which of the following is NOT true about the aggregate demand curve?
A) The production possibilities curve determines the slope of the aggregate demand curve. B) The aggregate demand curve shows total planned real expenditures at different price levels. C) Changes in the economic conditions in other countries will lead to a shift of the aggregate demand curve. D) The aggregate demand curve considers the entire circular flow of income.